Memorandum submitted by the Association
of British Insurers (ABI)
OVERVIEW
1. The Association of British Insurers (ABI)
represents the collective interests of the UK's insurance industry.
The Association helps to inform, and participates in, debates
on public policy issues relevant to the insurance industry and
also acts as an advocate for high standards of customer service
in the insurance industry. The Association has around 400 companies
in membership. Between them, they provide 94% of domestic insurance
services sold in the UK. ABI member companies account for almost
20% of investments in the London stock market.
2. The insurance industry helps people protect
themselves against risks that they cannot otherwise manage. People
on low incomes usually have fewer material possessions, but they
are also often less able to bear their loss. They cannot go out
and instantly replace a stolen TV. Nor can they easily afford
to repair the damage caused by a burst pipe or storm. Insurance
is just as valuable to them as to higher income groups—possibly
more so, as they often live in areas more vulnerable to crime.
The industry has therefore developed schemes to help people get
easier access to its services, and is now looking at what more
can be done.
3. Our work is designed to address three
core obstacles to providing a service to low income customers:
— Cost: some people just do not have
money to spare for insurance, at any price. And because of the
degree of risk many poor people face from crime and other causes,
getting the cost low enough for them, whilst maintaining commercial
viability can be impossible.
— Payment systems: insurers cannot
efficiently collect payments from people without bank accounts.
This adds to the cost of the service and reduces its availability.
— Understanding: those with low levels
of financial education can find insurance services hard to understand
and may be deterred by the documentation. Some appear to have
fundamental misconceptions: believing, for example, that the service
has not been worth having if there has been no reason to claim,
and that therefore cover should not be renewed.
4. This paper reviews the work being done
in each of these areas. Its principal message is that effective
solutions depend on the industry working constructively with low-income
communities and other groups, and with local and central government.
We hope the Select Committee can help highlight the need for such
partnerships.
5. The paper also considers the industry's
role in helping low income households to save and so develop a
cushion against financial shocks, particularly by securing an
adequate pension.
SUMMARY OF
KEY POINTS
6. The insurance industry has been an active
promoter of financial inclusion. As well as the broader social
and economic benefits increased financial inclusion can bring,
households which are more securely embedded in the financial system
are more likely to become consumers of a broadening range of financial
services. Promoting financial inclusion is good business sense
as well as socially desirable.
7. Apart from access to simple banking facilities,
the key financial services most often needed by those in danger
of being financially excluded are basic insurance products such
as home contents insurance. To help ensure easy access to such
products, insurers have joined forces with many local authorities
and housing associations to create "Insurance With Rent"
schemes. These allow tenants to pay insurance premiums weekly
or monthly alongside their rent payments.
8. For low-income families the affordability,
as well as the accessibility, of products such as home contents
insurance remains a key issue. Home insurance is now over 20%
cheaper in real terms than 10 years ago, a price decline that
reflects increased industry efficiency and competition. Unfortunately,
in spite of the downward trend in administration costs, in many
socially deprived areas high crime and fire risks remain a large
element of costs. The insurance industry would welcome working
in partnership with government and others to tackle this problem
and further improve affordability. Such a partnership approach
has worked well in tackling other issues related to high risk
insurance, such as the work the industry has done with the Environment
Agency and DEFRA to address the issue of flooding.
9. Improving financial understanding among
consumers will also help improve financial inclusion. The insurance
industry has funded a variety of schemes to improve consumers"
financial capability and access to financial advice. For example,
Prudential has given significant support to Citizens Advice to
help fund its work in this area. The industry has also actively
participated in various working parties and pilot schemes established
by bodies such as the Financial Services Authority. An overall
national strategy is now needed to improve financial capability
among consumers, plus action to ensure that the education system
plays its role in improving financial capability. Encouragingly,
recent developments signal that deficiencies here are now starting
to be tackled. The FSA has indicated its intention to accelerate
its plans for workplace-based financial advice, and the Government
has announced plans for financial capability issues to have a
place within the mathematics curriculum.
10. Financial inclusion requires not only
that individuals are engaged with the financial system but that
they are in a position to accumulate capital assets that can be
called upon either to fund opportunities (such as education or
training) or to ensure that financial setbacks do not have a long-term
impact. In introducing the Child Trust Fund (CTF), the government
recognised that assets and capital are as important as income
when tackling exclusion and poverty. The CTF is a welcome development,
but the fact that a significant minority of parents have still
to use their CTF vouchers shows that financial inclusion is not
just about access to funds, but also about knowledge of, and comfort
with, personal finance issues.
11. Pensions are a key area of the savings
market where large numbers of those on below-average earnings
are effectively in danger of being excluded from pension savings.
The Pension Commission's Second Report[28]
concluded that that those on incomes below £9,500 a year
are unlikely to derive significant benefit from saving and are
likely to rely on the state system for pension provision. The
Commission also highlighted the fact that current pension provision
arrangements had a poor track record in reaching those with earnings
above £9,500, but below the median. The Commission found
that current arrangements also often failed to include those working
for small and medium sized businesses. The ABI supports the Pension
Commission's suggestion that exclusion from decent pension provision
can be tackled in the workplace by auto-enrolment, with an opt-out
for those who do not wish to participate. We further argue that
auto-enrolment in partnership with the existing life and pension
industry infrastructure is likely to be a more effective and lower
risk option than creating a new Government agency for the purpose,
as suggested by the Pension Commission.
12. Stakeholder products were intended by
the government to provide cost effective access to savings products
for those on low incomes. They continue to be supported by the
industry. It is therefore disappointing that the FSA's "Basic
Advice" regime, designed specifically for the sale of Stakeholder
products, has retained many of the high-cost features of the current
"full advice" regulatory regime. The original vision—of
simple, reliable products sold cheaply within a light-touch regulatory
regime—has been lost. This illustrates a broader issue,
which is that sometimes regulation of product sales, while designed
to help the customer, can actually have an adverse impact on access
to financial services, particularly for the low paid.
HOME INSURANCE
AND FINANCIAL
INCLUSION
13. With low incomes, few assets and limited
access to affordable credit, financially excluded households are
often exposed to serious risks. Those living in a very low-income
household (income less than £5,000 a year) are twice as likely
to be burgled[29],
31 times more likely to suffer a fire and 16 times more likely
to die in a fire[30]
than the average household. Research has also found that households
with no insurance cover are much more likely to be burgled than
those who do have it,[31]
and the impact of property crime is most severe for those on low
income without household insurance, as they are less likely to
be able to replace stolen goods themselves.[32]
14. The insurance industry recognises that
enabling low-income families, usually with little or no savings,
to protect their possessions against the risks of fire, flood
and theft can be a key factor in avoiding financial hardship and
indebtedness.
15. For those on low incomes but with some
assets (eg home or car owners) the industry is achieving good
levels of insurance take-up, only slightly lower than for the
population as a whole.[33]
However, those on the very lowest incomes with virtually no assets
tend to remain excluded, for three key reasons:
— A lack of disposable income;
— Living in high-risk circumstances,
which drives up premiums; and
— Not having knowledge of the most
appropriate or competitive insurance offerings.
16. Nevertheless, insurers are attempting
to address the needs of these customers, who want good quality
products (with the right coverage and sensible exclusions), appropriate
for the value of their possessions, and affordable within their
budgets. To achieve further inclusion of these groups, the ABI
believes that the insurance industry needs to work in partnership
with others to address:
— Insurance costs through better policing,
security and fire safety measures and education;
— Distribution costs through partnership
marketing with Credit Unions, trade unions and social housing
schemes; and
— Education for financial capability
in schools and beyond.
17. Households in the lowest 20% of income
groups have £132 per week of disposable income, compared
to the national average disposable income of £489 per week.[34]
Unsurprisingly, this group also spends less per week on household
insurance—£2.00 per week on average, compared with
the average household's spending of £5.00 per week.[35]
Currently, 45% and 58% of the households in the two lowest income
deciles respectively have home contents insurance, compared with
an average 77% for the UK population as a whole. Half of households
without home contents insurance have had a policy in the past
but have subsequently let it lapse, largely because of financial
strain.[36]
This suggests that the key problem for many non-insured households
is affording contents insurance rather than any institutional
problems that might deny them access to insurance.
18. The insurance industry has made strenuous
efforts to cut the cost of home insurance and improve its affordability.
These efforts have borne fruit and home insurance is now approximately
23% cheaper in real terms than 10 years ago.[37]
This cost reduction has largely been delivered through increased
efficiency in distribution and administration. Unfortunately,
the other major element of insurance costs is associated with
the risks insured. Insurers have long been involved in working
with other organisations to give practical advice in areas such
as fire safety and burglary prevention, but risk premiums inevitably
reflect crime rates and accidental fire risks, issues beyond the
direct control of the industry. The industry would welcome a closer
partnership with government departments and police authorities
to tackle problems such as high crime rates. Such an approach,
with the industry working closely with the Environment Agency
and DEFRA, has already worked well in tackling problems connected
with flooding.
19. As well as cutting costs, the insurance
industry has also improved the accessibility of its products.
The inevitable reduction in the number of companies offering door-to-door
collection of premiums (a traditional, but very high cost, means
of serving low income households), has been balanced by the provision
of insurance products via non-traditional routes such as supermarkets
and Post Offices, as well as directly via the phone and internet.
These sales routes complement more traditional outlets such as
insurance brokers and banks.
20. The insurance industry recognises that
the decline of home collection may create difficulties for those
who cannot pay via direct debit or annual cheque. For those who
do not have access to a bank account with these facilities,[38]
the industry has developed innovative methods by which customers
can pay their premiums. "Insurance With Rent" schemes
give social housing tenants the option to take out standard contents
insurance (arranged through their landlord) and pay the premiums
alongside their rent payments. Such schemes are available in around
half of local authorities in England and Wales and 75% of local
authorities in Scotland.[39]
When local authority housing stock is transferred to small housing
associations, there can sometimes be problems arising from a lack
of the infrastructure to administer the schemes. One way of tackling
this problem is through consortiums, such as the Northern Housing
Consortium (which has over 170 members representing local authorities,
housing associations and other social housing landlords).
21. The insurance industry also welcomes
the moves by some of larger Credit Unions (such as Leeds City
Credit Union) to help their members make payments by offering
"Budget Accounts." These allow members to nominate bills
they would like the Credit Union to pay on their behalf, deducting
a proportion of the bill from members" accounts on a weekly
basis. Another scheme offered by Co-operative Insurance Services
(CIS), is a "lock box" system, where CIS issue a Giro
slip enabling the customer to pay their bill in cash over the
counter at a local Post Office, bank or building society. Such
schemes also help customers who budget on a weekly basis.
22. As well as making payment easier, the
insurance industry has also worked with Credit Unions and other
affinity organisations to offer tailored products designed for
particular groups of consumers. Some schemes offer low sums insured
(for example, £6,000) and operate with no policy excess,
recognising that a small loss can be very significant for low-income
customers. Similarly, Unison (the public service union) has a
wholly-owned insurance company—UIA (an ABI member)—that
provides insurance to its members aimed at low income consumers.
UIA provides schemes to many other unions as well. Industry products
designed for the elderly are also marketed through specialist
organisations like Age Concern, Help the Aged, and Saga.
FINANCIAL CAPABILITY
AND FINANCIAL
INCLUSION
23. The insurance industry believes that
financial exclusion can partly be tackled by improving public
understanding of personal finance. Households often end up making
poor financial decisions or taking unnecessary risks simply because
they do not appreciate the range of alternatives open to them.
The FSA has also identified the problem of "self exclusion",
where households with little practical knowledge of the financial
system believe that it is simply "not for people like them".
24. The insurance industry therefore supports
the Financial Capability Strategy being developed by the FSA and
is an active participant in the FSA's work. While it is right
that the FSA fulfils its statutory duty to promote public understanding
of the financial system in this way, it is important that it has
clear Government support in this work. We therefore broadly welcome
the recent package of measures to support financial capability
initiatives announced in the Pre-Budget Report. While important
first steps have been made, so far there has been insufficient
urgency in developing a coherent national strategy for financial
capability. Stronger leadership is needed, both from Government
and from the FSA, for more progress to be made. We look forward
to the FSA's final publication this spring of the business cases
underpinning the various strands within its financial capability
work alongside its plans to roll out recent pilot studies on a
larger scale.
25. In Spring 2006 the FSA also intend to
publish their Financial Capability Baseline Survey, which will
help to identify the types of financial skills and knowledge that
people lack, and the groups who are in most need of help. This
is a welcome development, and should form the basis for a strategy
based on the needs of consumers.
26. We also welcome that DfES's plans to
prioritise maths in the school curriculum, and to prioritise personal
finance education within maths teaching, from 2008. A step-change
improvement in financial capability can only be achieved through
more concerted action in schools to give children the financial
skills they need for adult life. The industry has long supported
this. Both the ABI and individual member companies are funders
of pfeg (personal finance education group), the charity that promotes
the improvement of the teaching of basic financial skills.
27. For many disadvantaged groups, however,
the key to improving understanding of how the financial system
works is likely to be easy access to face-to-face generic financial
advice. A variety of private initiatives, many associated with
the insurance industry, are actively trying to help fill the generic
advice gap. Prudential has provided significant financial support
for the work of Citizens Advice Bureaux in this area. The Resolution
Foundation, a charitable trust set up by the Chief Executive of
Resolution plc, is also actively exploring ways of plugging the
advice gap for those on modest incomes. Another notable initiative
in this area has been the setting up of the Friends Provident
Foundation after the demutualisation of Friends Provident. This
body is focussing its initial efforts on financial exclusion and
has made a series of grants to allow research into the best way
of helping particularly "hard to access" groups such
as the homeless.
28. The ABI believes that such individual
efforts have so far been hampered by the lack of a clear overall
strategy—although again, there has recently been some welcome
progress. For example, after the Financial Services and Markets
Act Two-Year Review the government announced its intention to
give exemptions from the FSMA financial promotions regime both
to employers giving advice to employees on pensions and to advice
centres such as Citizens Advice Bureaux giving generic financial
advice. The concern nevertheless remains that current developments
in the generic financial advice area represent a piecemeal and
fragmented approach that risks confusing consumers. There is a
strong case for bringing the current plethora of generic information
and advice together to make it easier to access, although developing
such a centralised resource will need the clear support of all
the regulatory authorities.
29. Efforts to improve the availability
of generic financial advice nationally have also at times being
threatened by developments at the EU level. The initial drafts
of the EU Commission's proposals for the "Market in Financial
Instruments Directive" would have created burdensome
additional regulation for generic financial advice initiatives,
although this was successfully resisted as a result of combined
lobbying by the industry and consumer groups such as the Financial
Services Consumer Panel.
INCENTIVES AND
BARRIERS TO
SAVINGS FOR
PEOPLE ON
BELOW AVERAGE
EARNINGS
30. There are clear benefits for both individuals
and society in ensuring that as many people as possible have easy
access to a wide range of savings products, including both products
designed to meet short term needs and those designed to facilitate
longer-term savings. There are particularly strong arguments for
ensuring that all those for whom it makes financial sense have
easy access to pension savings to ensure a degree of financial
security into retirement.
THE CHILD
TRUST FUND
31. The Child Trust Fund (CTF) has the potential
to reduce financial exclusion and extend opportunity and members
of the insurance industry have taken an active role in promoting
and supporting CTFs. Even so, CTFs will only achieve their objectives
if they reinvigorate a savings culture among families and if they
encourage children to continue with the savings habit into adult
life. While useful in themselves, the big difference Government
payments into CTFs can make is if they prompt further regular
saving from parents, grandparents and older children.
32. There are encouraging signs that many
families are already making use of CTFs to make regular savings.
However, after almost a year a significant minority of parents
have still failed to select and open a CTF account for their child,
and will therefore have an account opened automatically for them.
This is disappointing, but demonstrates that financial inclusion
is not just about access to funds, but also about individuals
having knowledge of, and feeling comfortable with, personal finance
issues. CTFs should be seen as a way of encouraging parents of
young children to increase their financial skills. They should
also be seen as a means of ensuring personal finance education
has more relevance to pupils' lives. As students approach 18 and
the maturity of their CTFs it will be important that within the
school curriculum they are given advice on the options available
in terms of the use of the funds.
33. The number of families failing to select
and open a CTF account also supports the argument for further
Government contributions at later stages to re-prompt families.
The ABI therefore welcomes the Chancellor's recent announcement
that he would consult on top-up payments at the age of seven and
at secondary school age. The Institute for Pubic Policy Research
has recently argued in a report ("Top Tips for Top Ups")
that there may be a role for matching payments from the Government
to encourage parent contributions. We believe this is a proposal
that could have a significant impact in encouraging saving and
should be explored by Government.
PENSIONS
34. In terms of longer-term savings, such
as pensions, the Pensions Commission concluded that those on incomes
below £9,500 a year are unlikely to derive significant benefit
from saving and are likely to rely on the state system. The Commission,
however, also identified significant numbers of under- and non-savers,
slightly further up the income scale. The group earning above
£9,500 but below median earnings are a particular area of
concern, with around two-thirds of those over-35 in this income
group identified as either non-savers or under savers. Another
area where pension provision is notably weak, and which is of
particular concern to the Commission, is among people working
for small and medium-sized businesses (SMEs) in which over 40%
of the working population are employed.
35. We believe that the empirical evidence
lends strong support to the view that auto-enrolment into pension
funds, as suggested by the Pensions Commission, would be a practical
way of tackling this problem. However, auto-enrolment needs to
be accompanied by an employer contribution if it is to bring real
results. Research carried out last year for the ABI by PricewaterhouseCoopers
(PwC) demonstrates that automatic enrolment could achieve a similar
impact to compelling individuals and their employers to save,
but only if there is a matching contribution from the employer.
Such an approach would benefit from the upside of "pure"
compulsion—a significant boost to savings—while avoiding
the downside—that compulsion hits the poorest hardest. If
the level of contribution were 3% from the employer and 5% from
the employee, as proposed by the Commission, we estimate (using
PwC's model) that a boost to pension saving of around £6
billion per year could be achieved.
36. The research also found that debt to
income ratios are significantly higher for those with pension
contribution rates below 5% than for those with higher contribution
levels. This suggests that some of those not saving may have good
short-term reasons for doing so. Unlike pure compulsion, automatic
enrolment allows those for whom saving is not appropriate at the
present time to opt out.
37. Automatic enrolment is also popular
with workers. Research published in the ABI's State of the Nation's
Savings survey[40]
found that 93% of working people with direct experience of automatic
enrolment think that it is a good idea. If a form of compulsion
were to be introduced, workers said they preferred the "soft
compulsion" model advocated by the Pensions Commission to
alternative "hard" compulsion models.
38. The ABI believes the Pensions Commission
is right to recommend automatic enrolment with soft compulsion,
but it is wrong to suggest this should take the form of a new
National Pensions Saving Scheme (NPSS), operated by a Government
agency, to administer the scheme. If automatic enrolment were
into the low-cost workplace pensions that already exist, this
would reduce the need for marketing and enable streamlined regulation—thus
reducing costs further. Coupled with measures to improve persistency—
for example by establishing a streamlined electronic contributions
collection system—and reduce means-testing, the environment
would then be right for the private sector to meet the challenge
set by the Government. The private sector could deliver pensions,
in this new environment, at a similar cost to the state, with
the added advantage of being experts in this area.
39. The state, on the other hand, does not
have a good track record in setting up and running such schemes.
As the consultants, Deloittes, put it "A more effective model,
like that used in Australia, would be to administer the system
through the life and pensions industry. This group have the existing
expertise and infrastructure in place to effectively administer
the programme which would enable the Government to introduce the
NPSS much more quickly. Pension providers have become much more
efficient over the past three years and despite concerns that
the costs would be more expensive if the system was not run by
the government, the administration costs for privately run schemes
are unlikely to exceed the 60 basis points costs currently incurred
by the government-run scheme in Sweden.[41]
40. This solution would build upon steps
already taken by the Government to facilitate and regulate low
cost private savings. It would also protect the future of workplace
pensions rather than put them at risk. A nationalised pension
system would send out the wrong message to employers. The implication
would be that workplace pensions were not needed because the state
was providing sufficient pensions. The proposals may therefore
act to reduce the amount of pension savings for some groups of
employees.
41. The public agree with this view. Almost
60% in a YouGov survey carried out by the ABI during the week
that the Commission's report was published thought that auto-enrolment
was a good idea and that existing pension providers should be
asked to run it. Only 19% thought that the Government should run
it.
BASIC ADVICE
PRODUCTS AND
FINANCIAL INCLUSION
42. It is important for as many households
as possible to have access not only to a pension but also to simple
savings products. Some form of savings is a major component of
financial inclusion as it provides security against future shocks
to income or unanticipated spending needs and reduces the risk
of exposure to unaffordable debt.
43. The ABI therefore supported the key
recommendation in the 2002 Sandler Review that regulated "stakeholder"
savings products should be sold via a "light-touch"
sales regime to help those with relatively modest savings needs
gain improved access to the savings market. We were disappointed,
however, that it took almost three years for the Government and
the FSA to devise the regulatory framework for stakeholders.
44. In April 2005, the Treasury launched
the stakeholder "suite" including a revised stakeholder
pension and medium-term investment products. At the same time,
the FSA introduced the "basic advice" regime for sales
of stakeholder products. Regrettably, the market development of
products sold under the basic advice regime has so far been quite
limited. A few insurance companies and banks are now offering
the new stakeholder products, but only two firms have entered
the basic advice market. This compares with initial FSA estimates
that 20 providers would enter the market. The explanation for
this is a regulatory regime, which in aggregate—taking account
of Treasury and FSA regulations and the impact of Financial Ombudsman
Service (FOS)—entails costs that make it economically challenging
to offer products within the price cap to consumers making low
contributions.
45. Sandler had proposed that regulated
products could be sold with little or no regulation of the sales
process. In reality the sales process devised by the FSA retains
key "suitability" requirements and is much closer to
the "full advice" approach than the original model envisaged.
The industry has also been deterred from investing in what constitutes
a completely new distribution channel by widespread uncertainty
about future FOS judgments regarding basic advice. Another major
barrier is the extension of means-testing, which raises challenging
questions for advisers regarding for the suitability of a stakeholder
pension for consumers on modest incomes. Combined with a price
cap that does not cover the upfront costs of providing advice,
it has been difficult to offer stakeholder products to the target
market.
46. The ABI has been working actively with
the regulators to try and address the barriers we have identified
to market development. We have issued a Model Guide for Consumers
on Basic Advice and Guidance for Providers of Basic Advice. These
aim to foster a shared understanding of what is expected of an
adviser offering basic advice. Meanwhile, the FSA has recently
clarified some of the regulatory issues by publishing a helpful
"Frequently Asked Questions" document on basic advice.
For example, it is now clear that advisers are not expected to
conduct full "know your customer" assessments. The FOS
also clarified for the first time that they would assess complaints
on the basis of the standards expected of an adviser offering
basic advice, not the additional requirements that apply to full
advice.
47. The ABI believes, however, that more
fundamental changes are necessary for the market to be commercially
attractive. The FSA 2006 post-implementation review of basic advice
should be a rigorous exercise, directed at identifying significant
rule changes and should be driven by the objective of making the
regime viable for customers that are not currently saving. We
believe this is in the consumer interest. A key sticking point
in the current basic advice regime is the still onerous suitability
tests that need to be performed before a product can be sold.
The Pensions Commission has argued that to boost low cost pension
saving we should remove the regulatory requirements to assess
the suitability of pension saving (in that case via the National
Pension Savings Scheme). A similar approach could be used as the
basis for a reinvigorated basic advice/stakeholder model.
BETTER REGULATION
AND FINANCIAL
INCLUSION
48. The problems experienced with the introduction
of the basic advice regime fit into a wider picture of well-intentioned
regulatory initiatives that nonetheless have the unintended consequence
of making it more difficult for consumers to access financial
services. Regulation is often an appropriate response to identifiable
market problems and there have been recent issues on which the
ABI has urged more, not less regulation (such as mortgage equity
release products and SIPPS). But there are also occasions in which
it may be better to risk the consumer having a less than perfect
product rather than no product at all. A range of regulatory requirements,
such as restrictions on financial promotions and suitability rules
add to compliance costs and can restrict access, particularly
by the low paid, to key financial services. It remains strikingly
true, for example, that it is much easier to sell a credit card
than a savings plan.
49. The answer is clearly not to dismiss
all regulation, but to examine more carefully the costs and benefits
of regulation. "Costs" should cover not just direct
compliance costs but all the likely impacts of the regulation
on consumers. Such cost-benefit analysis should pay particular
attention to ensuring that sections of the population will not
be disproportionately affected by regulation. The FSA needs to
be aware of the detrimental impact its regulations can have on
access to savings products, particularly among those on low incomes
with little practical access to commercially paid-for financial
advice. If we are to avoid a situation in which it is only commercially
viable to market savings products to the relatively prosperous,
cultural change is needed at the FSA. We believe the Government
should amend the FSA's statutory objectives to achieve this by
ensuring it pays due regard to the impact of regulation on the
availability of products.
January 2006
28 "A New Pension Settlement for the Twenty-First
Century", the Second Report of the Pension Commission, Back
29
Home Office (2005) Home Office Statistical Bulletin: Crime
in England and Wales. Back
30
ODPM (2004) Fires In Homes. Back
31
Palmer G, Carr J and Kenway P (2003) Monitoring Poverty and
social exclusion, New Policy Institute: Joseph Rowntree Foundation. Back
32
Palmer G, Carr J and Kenway P (2003) Monitoring Poverty and
social exclusion, New Policy Institute: Joseph Rowntree Foundation. Back
33
For example: House buildings-85% of the lowest income decile of
households buying a home with a mortgage have buildings insurance
compared with 90% of all such households. In the lowest income
deciles, 85% of households owning their home outright have buildings
cover compared with 89% of all outright home owners.
Motor insurance-The fact that this cover
is required by law is reflected in a high take-up: 28% of the
lowest income quintile households have vehicle insurance against
29% having access to (though not necessarily ownership of) one
or more cars. Back
34
Office for National Statistics (2005) Family Spending 2005:
A report on the 2004-05 Expenditure and Food Survey. Back
35
Office for National Statistics (2005) Family Spending 2005:
A report on the 2004-05 Expenditure and Food Survey. Back
36
Whyley C, McCormick J and Kempson E (1998) Paying for peace
of mind: Access to home contents insurance for low-income households,
Policy Studies Institute. Back
37
AA Premium Index, 2005. Back
38
1.9 million households or 2.8 million adults do not have a bank
account of any kind. Office for National Statistics (2003) Family
Resources Survey 2002/03. Back
39
HM Treasury (2004) Promoting Financial Inclusion and Hood
J, Stein W and McCann C (2005) Insurance with Rent Schemes:
An empirical study of market provision and consumer demand Back
40
The State of the Nation's Savings 2005, ABI, December 2005. Back
41
For further details see "Sweden's New FDC Pension System"
by Edward Palmer, Professor of Social Insurance at Uppsala University,
2004. Back
| 
